[0:00]
OtherWell, it's 345 in Omaha, and this is the annual meeting of Berkshire Hathaway.
WarrenIt doesn't look like an annual meeting. It doesn't feel exactly like an annual meeting, and it particularly doesn't feel like an annual meeting because my partner is 60 years. Charlie Munger is not sitting up here, and I think most of the people that come to our meeting really come to listen to Charlie. But I want to assure you, Charlie at 96 is in fine shape. His mind is as good as ever, his voice is as strong as ever, but it just didn't seem like a good idea to have him make the trip to Omaha for this meeting. But nevertheless, I want you to assure you Charlie is in fine shape, and he'll be back next year. And we'll try to have everything in the show that we normally have. have next year. What's, of course, on everybody's mind the last two months or so is, you know, what's going to be the situation in terms of health in the United States and what's going to be the situation in terms of the economy in the United States in the months and perhaps the years to come. In 2008 and 9, our economic train went off the tracks. And there were some reasons why the roadbed was weak in terms of the banks and all of that sort of thing. But this time we just pulled the train off the tracks and put it on a siding. And I don't really know of any parallel of terms of a very, very, well, the most important country in the world, most productive, huge population. in effect, sidelining its economy and its workforce. But even facing that, I would like to talk to you about the economic future of the country. Because I remain convinced as I have, I was convinced of this. World War II, I was convinced of it during the Cuban Missile Crisis, 9-11, the financial crisis. financial crisis that nothing could basically stop America. And we've faced great problems in the past. We haven't faced this exact problem. In fact, we haven't really faced anything quite resembles this problem. But we've faced tougher problems. And the American miracle, the American magic, has always prevailed. then it will do so again. And we found that nothing can stop America when you get right down to it. And it's been true all along. It may have been interrupted with the scariest of scenarios when you had a war with one group of states fighting another group of states. And it may have been tested again in the Great Depression, and it may be tested now to some degree. But in
[3:49]
WarrenIn the end, the answer is never bet against America. I believe anybody knows what the market is going to do tomorrow, next week, next month, next year. I know America is going to move forward over time, but I don't know for sure. And we learned this on September 10th, 2001, and we learned it a few months ago in terms of the virus. Anything can happen. in terms of markets. And if you, you can bet on America, but you have to be careful about how you bet. Because, simply because markets can do anything. You just don't know what's going to happen. You know, at least in my view, you know that America's tailwind is not exhausted. Equities are going to outperform that bond. They're going to outperform that bond. They're going to outperform Treasury bills. They're going to outperform that money you've stuck under your mattress. I mean, they are a enormously sound investment as long as they're an investment and they're not a gambling device or something that you think you can safely, you know, buy on margin or whatever it may be. The American tailwind is marvelous. American business represents, and it's going to have interruptions and you're not going to foresee the interruptions and you don't not want to get yourself in a position where those interruptions can affect you either because you're leveraged or because you're psychologically unable to handle looking at a bunch of numbers. I'm not saying that this is the right time to buy stocks. If you mean by right, that they're going to go up instead of that, I don't know what they're going to go in the next day or week or month or year. But I hope I know enough to know. Well, I think I can buy a cross-section and do fine over 20 or 30 years. And I think that's kind of for a guy 89 that's an optimistic viewpoint. But I hope that really everybody would buy stocks with the idea that they're buying partnerships and businesses and they wouldn't look at them as chips too. move around up or down. You'll see in the month of April that we net sold $6 billion or so of securities. And that's basically, that isn't because we thought the stock market was going to go down or anything of the sort or because somebody changes their target price or they change this year's earnings forecast. I just decided that I'd made a mistake in evaluating a evaluating as an understandable mistake was a probability weighted decision when we bought that we were getting an attractive amount for our money when investing across the airlines business. So we bought roughly 10% of the four largest airlines. And we probably, this doesn't, it's not 100% of what we didn't April, but, but we probably paid.
[7:49]
Warren$7 or $8 billion, and then somewhere between $7 and $8 billion, to own 10% of the four large companies in the airline business. And it turned out I was wrong about that business because of something that was not in any way the fault for excellent CEOs. I mean, believe me, no joy being a CEO of an airline, but the companies we bought were well managed. They did a lot of things right. It's a very, very, very difficult business because you're dealing with millions of people every day. And if something goes wrong for 1% of them, they are very unhappy. So I don't envy anybody the job of being CEO of an airline, but I particularly don't enjoy him being in a period like this where essentially nobody and people have been told basically not to fly. I've been told not to fly for a while. I'm looking forward to fly. I'm looking forward to fly. I may not fly commercial, but that's another question. But the airline business, and I may be wrong and I hope I'm wrong, but I think it changed in a very major way. And it's obviously changed in the fact that their four companies are each going to borrow, you know, perhaps an average of at least 10 or 12 billion each way. You have to pay that back out of earnings over some period of time. period of time. I mean, you're $10 or $12 billion worth off if that happens. And of course, in some cases, they're having to sell stock or sell the right to buy a stock of these prices. And that takes away from the upside down. And I don't know whether two or three years from now that as many people will fly as many passenger miles as they did last year. They may and they may not. But the future is much less clear to me about how the business will turn out through absolutely no fault of the airlines themselves. That's something that was a low probability event happened and it happened to hurt particularly, whether it's the travel business, the hotel business, the cruise business, theme park business. But the airline business in particular, and of course the airline business has the problem that if the business comes back, 70% or 80%, the aircraft don't disappear. So you've got too many planes. And it didn't look that way when the orders were placed a few months ago and or when arrangements were made. But the world changed for airlines, and I'd wish them well.
Questionerhave already been hardest hit or will be by the coronavirus pandemic. And what are the implications
[11:01]
WarrenWell, I'll put it this way, five years from now, I think Berkshire will be employing considerably more people. And I don't see where we'll have large depths. But the virus could take off in certain ways that in some of our manufacturing businesses, for example, the demand could be dramatically reduced. And, and And in those cases, we would have layoffs at some point.
QuestionerThis one's from Andrew Wenke. He says, can you ask Warren, why he didn't purchase, repurchase Berkshire shares in March when they dropped to a price that was 30% lower than the price that he had repurched shares for in January and February?
WarrenYeah. It was very, very, very, very short period where they were 30% less. But we, I don't think Berkshares relative to present value are at a significantly different discount than they were when we were paying somewhat higher prices. I mean, it's like Kane said or whoever it was, if the facts change, I changed my mind. I changed my mind, what do you do, sir? You know, it's, so it's, we always think about it. I don't feel that it's far more compelling to buy Berkshire shares now than I would have felt three months or six months or nine months ago. It's always, it's always a possibility, and we'll see what happens. And Becky, I would just, I would just say again that we may have, I hope we don't, but we may get some unpleasant surprises. And we're dealing with a virus that, that, uh, we may have, I hope we don't, but we may get some unpleasant surprises. And we're dealing with a virus that spreads its wings in a certain way, you know, in very unpredictable ways and how the, how the, how the, how Americans react to it. You know, there's all kinds of possibilities, but I definitely come to the conclusion after weighing all that sort of, I've never been against America. So thanks.